Woodward v. Pratt, Bradford & Tobin, P.C.
| Decision Date | 08 September 1997 |
| Docket Number | No. 5-96-0696,5-96-0696 |
| Parties | , 226 Ill.Dec. 32 James WOODWARD, Plaintiff-Appellee, v. PRATT, BRADFORD & TOBIN, P.C., Defendant-Appellee (The Home Insurance Company, Intervenor-Appellant). |
| Court | United States Appellate Court of Illinois |
Michael Reda, Adrian P. Sulser, Joan Bernstein, Evans & Dixon, Edwardsville, for Appellant.
Mary E. Massa, Pratt, Bradford & Tobin, P.C., East Alton, for Pratt, Bradford & Tobin, P.C.
Morris B. Chapman, Clarence W. Harrison, II, Morris B. Chapman & Associates, Ltd., Granite City, for James Woodward.
In October 1989, James Woodward, an employee of John Morrell & Company, was injured during the course of his employment. The injury occurred in St. Louis County, Missouri, allegedly as a result of a defective pallet truck manufactured by Crown Central Corporation (Crown).
In November 1989 Woodward retained the firm of Pratt, Bradford & Tobin, P.C. (Pratt), to represent him. A claim was filed on Woodward's behalf with the Illinois Industrial Commission. Illinois's jurisdiction over the workers' compensation claim was challenged by the employer, but for reasons not pertinent here, the commission found that it had jurisdiction and that Illinois law applied. As a result, the employer's insurance carrier, Home Insurance Company (Home), ultimately paid out benefits to Woodward in an amount exceeding $155,000.
On April 4, 1994, 4 1/2 years after the injury occurred, the Pratt firm filed suit on Woodward's behalf against Crown in the circuit court of Madison County, alleging theories of strict liability and negligence in the design and manufacture of a pallet truck being operated by Woodward. It was alleged that these design/manufacturing defects caused injuries to Woodward. The injuries that were the subject of the lawsuit against Crown were the same injuries for which Home had paid workers' compensation benefits.
On April 25, 1994, the law firm of Evans & Dixon (Home's attorneys) wrote to the Pratt office inquiring about the status of the case against Crown. On April 27, 1994, the Pratt firm mailed to Evans & Dixon a copy of the complaint that had been filed against Crown, along with a letter promising to keep Home updated on developments. On May 18, 1994, Evans & Dixon again wrote the Pratt firm. Receipt of a copy of the complaint was acknowledged, and a request to be kept advised of developments was reiterated.
As some point thereafter, the suit against Crown was removed to the United States District Court for the Southern District of Illinois. It was apparently contended in that case that Missouri's five-year limitation period should apply and not the two-year limitation period in Illinois. On January 17, 1995, the district court dismissed the case on statute of limitations grounds.
Following the dismissal of his case in federal court, Woodward filed suit against the Pratt firm on February 21, 1995, alleging legal malpractice. On May 18, 1995, Home moved to intervene and file its workers' compensation lien against any recovery Woodward might receive from his suit in the legal malpractice case. Leave to intervene was granted over Woodward's objection. Thereafter, Woodward moved to dismiss the claim filed by Home, alleging that any recovery in the attorney malpractice case was not subject to the workers' compensation lien. The circuit court granted the motion to dismiss, and Home appeals.
Home raises several issues on appeal. They will be considered in order. Because issues one and two are closely related, they will be discussed together.
Home states issues one and two as follows:
All parties agree that no Illinois case has previously addressed these issues specifically.
We believe that certain general principles must first be discussed. It is fundamental and indisputable that if an injured employee receives benefits under the Illinois Workers' Compensation Act, a lien in favor of the employer (or the employer's insurer) attaches to any recovery the employee might receive from a tortfeasor who caused the injury for which benefits were paid. Kimpling v. Canty, 13 Ill.App.3d 919, 300 N.E.2d 839 (1973). In this decision, when discussing an employer or the employer's insurer, we consider them to be synonymous.
The following statute, section 5(b) of the Workers' Compensation Act (Act), both creates the lien and describes the circumstances under which the lien attaches.
"(b) Where the injury or death for which compensation is payable under this Act was caused under circumstances creating a legal liability for damages on the part of some person other than his employer to pay damages, then legal proceedings may be taken against such other person to recover damages notwithstanding such employer's payment of or liability to pay compensation under this Act. In such case, however, if the action against such other person is brought by the injured employee or his personal representative and judgment is obtained and paid, or settlement is made with such other person, either with or without suit, then from the amount received by such employee or personal representative there shall be paid to the employer the amount of compensation paid or to be paid by him to such employee or personal representative including amounts paid or to be paid pursuant to paragraph (a) of Section 8 of this Act [ (820 ILCS 305/8(a) (West 1994)) ].
Out of any reimbursement received by the employer pursuant to this Section, the employer shall pay his pro rata share of all costs and reasonably necessary expenses in connection with such third-party claim, action or suit and where the services of an attorney at law of the employee or dependents have resulted in or substantially contributed to the procurement by suit, settlement or otherwise of the proceeds out of which the employer is reimbursed, then, in the absence of other agreement, the employer shall pay such attorney 25% of the gross amount of such reimbursement.
If the injured employee or his personal representative agrees to receive compensation from the employer or accept from the employer any payment on account of such compensation, or to institute proceedings to recover the same, the employer may have or claim a lien upon any award, judgment or fund out of which such employee might be compensated from such third party.
In such actions brought by the employee or his personal representative, he shall forthwith notify his employer by personal service or registered mail, of such fact and of the name of the court in which the suit is brought, filing proof thereof in the action. The employer may[ ] at any time thereafter join in the action upon his motion so that all orders of court after hearing and judgment shall be made for his protection. No release or settlement of claim for damages by reason of such injury or death, and no satisfaction of judgment in such proceedings shall be valid without the written consent of both employer and employee or his personal representative, except in the case of the employers, such consent is not required where the employer has been fully indemnified or protected by Court order.
In the event the employee or his personal representative fails to institute a proceeding against such third person at any time prior to 3 months before such action would be barred, the employer may in his own name or in the name of the employee, or his personal representative, commence a proceeding against such other person for the recovery of damages on account of such injury or death to the employee, and out of any amount recovered the employer shall pay over to the injured employee or his personal representatives all sums collected from such other person by judgment or otherwise in excess of the amount of such compensation paid or to be paid under this Act, including amounts paid or to be paid pursuant to paragraph (a) of Section 8 of this Act, and costs, attorney's fees and reasonable expenses as may be incurred by such employer in making such collection or in enforcing such liability." 820 ILCS 305/5(b) (West 1994).
If Woodward had succeeded in his action against Crown, any recovery would have been subject to the workers' compensation lien held by Home. Our case is not that simple. In this case, we are confronted with deciding whether the lien attaches to a potential recovery from an attorney or law firm which allegedly committed malpractice by allowing the statute of limitations period to expire on the underlying suit against the tortfeasor that caused the injury.
Home claims that the lien attaches to any recovery from the attorneys. It argues that section 5(b) is akin to a common law right of subrogation (citing Chicago Transit Authority v. Yellow Cab Co., 110 Ill.App.3d 379, 66 Ill.Dec. 120, 442 N.E.2d 546 (1982)), and that its purpose is to prevent a double recovery. West v. Western Casualty & Surety Co., 846 F.2d 387 (7th Cir.1988).
Home relies heavily upon Williams v. Katz, 23 F.3d 190 (7th Cir.1994), for the proposition that the lien attaches to any recovery that Woodward might make in his attorney malpractice case. The court in Katz, after analyzing various authorities and the language of section 5(b), concluded that the...
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